Philadelphia Semiconductor Index Drags the QQQs Higher
Chips have been one of the strongest industry groups in the last several years. The drivers are mobility, cloud computing, gaming and increased semiconductor use in general (including autos and industrial devices). 5G is another looming catalyst.
Today the
SOX
is on pace for its highest close since coronavirus first hammered the market on Monday, February 24. SOX has spent almost an entire month battling its way above the 200-day simple moving average (SMA) and now even its 50-day SMA has turned positive.
Meanwhile, various reports hint that the economy is rebounding. For example: the New York Empire index and consumer sentiment last week and NAHB’s sentiment index yesterday. (These cover May, not April.)
In the old days, investors played an economic recovery with banks, retailers, energy and transports. While those stocks may also benefit, chips have become the new bellwether for the economy in general. So if a recovery is here, traders are now just as likely to buy semiconductors over those “value” buckets.
SOX doesn’t have any obvious chart patterns, but its price action seems to reflect confidence in a recovery. Traders may want to look for opportunities in the space – especially in names like
TER
that continue to hug their 200-day SMAs. Chips are also among the most active underliers in the options market, which may provide traders with opportunities as well.
Today the
SOX
is on pace for its highest close since coronavirus first hammered the market on Monday, February 24. SOX has spent almost an entire month battling its way above the 200-day simple moving average (SMA) and now even its 50-day SMA has turned positive. Meanwhile, various reports hint that the economy is rebounding. For example: the New York Empire index and consumer sentiment last week and NAHB’s sentiment index yesterday. (These cover May, not April.)
In the old days, investors played an economic recovery with banks, retailers, energy and transports. While those stocks may also benefit, chips have become the new bellwether for the economy in general. So if a recovery is here, traders are now just as likely to buy semiconductors over those “value” buckets.
SOX doesn’t have any obvious chart patterns, but its price action seems to reflect confidence in a recovery. Traders may want to look for opportunities in the space – especially in names like
TER
that continue to hug their 200-day SMAs. Chips are also among the most active underliers in the options market, which may provide traders with opportunities as well.